How are your business expenses compared with those of your peers? Recent benchmarking data from finance automation platform Ramp can help you see the areas where other companies are cutting back and what they’re prioritizing to help you make better spending decisions in the current economic climate.
Ramp looked at how companies spent money in Q1 2022, as inflation was just starting to make its mark on the economy.
Spending priorities for companies
Throughout Q1, spending fluctuated – with the greatest declines toward the end of the quarter in April. That likely signifies a trend toward making fewer big purchases in the back half of the year.
While Ramp’s data doesn’t give any insight into one of the biggest expenses for companies, payroll, it did look at another significant expense you may be managing right now: advertising. Advertising was the largest expense for companies in Ramp’s research. However, total spending has dropped over the last 12 months, meaning your peers may be scaling back on it a bit right now in favor of other priorities.
An expense that your peers actually are investing more money in right now is software, including cloud solutions. At the end of Q1 2022, software spend was at an all-time high for companies using Ramp.
Currently, automation is a priority for many firms. Reason: The cost of software is typically outweighed by the benefits of streamlining processes and improving communication between employees, especially in Finance.
Some of the most common software platforms and services your peers are investing in right now include:
- Google Services
- Google G Suite
- Amazon Web Services
- GitHub, and
T&E spending also increased during Q1 2022, which is likely due to travel restrictions related to the COVID-19 pandemic easing. Companies spent the most on lodging, restaurants and flights.
Closer look at T&E spending
Ramp also analyzed data on the average T&E spending limits employers were putting into place for their road warriors. Smaller businesses (those with 75 employees or fewer) typically had more generous limits than their larger counterparts.
When looking at lodging, the max limit for small business travelers per night ranged from $294-$301. For midmarket businesses (76-499 employees), the max nightly limit was $283. For enterprises (500 or more employees), the max cost per night of lodging was $300.
Per diems were also higher for small businesses, with daily limits ranging between $87-$223. Data wasn’t available for enterprises.
With flights, the max costs for airfare for small businesses ranged between $889-$1,000. Midmarket companies actually had higher flight limits, at $1,200. No data was available for enterprises.
You may want to review your own T&E limits to see if they measure up. Also, if you aren’t already, consider getting more bang for your buck by securing reduced corporate rates with preferred partners for lodging and airfare, or by working with a travel agency.